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Livent shares tumble on trimmed financial guidance

US lithium producer Livent Corporation’s New York shares tumbled nearly 14% in after-market trading Tuesday as lithium price blues continue to weigh on industry participants.
Livent shares tumble on trimmed financial guidance Livent shares tumble on trimmed financial guidance Livent shares tumble on trimmed financial guidance Livent shares tumble on trimmed financial guidance Livent shares tumble on trimmed financial guidance

Livent Corporation is re-evaluating its capital expansion plans in the wake of soft market conditions

Philadelphia, Pennsylvania-based Livent said in an after-market statement it had pared its full-year 2019 financial guidance as results were likely to be negatively impacted by lower-than-expected realised pricing and lower lithium hydroxide volumes on the back of delayed customer orders.

The company now expects full-year 2019 revenue in the range of US$385-390 million, with adjusted EBITDA of $98-$101 million and adjusted earnings per share of 40c-42c. These metrics are down from prior revenue guidance in the range of $400-$410 million, adjusted EBITDA of $105-$110 million and adjusted earnings per share of 44c-47c per diluted share.

Wall Street analysts on average expect headline earnings per share to come in at 46c, based on expected revenue of $400 million.

Livent expects the lower pricing to persist through most of 2020, with the average realised price for lithium hydroxide in 2020 anticipated to be "low-to-mid-teens per cent lower than 2019".

Livent maintained its prior 2020 volume outlook and plans to buy up to 7,000 tonnes of third-party lithium carbonate to support higher hydroxide sales volumes. It had previously guided for LiHO sales of 26,000t in 2020.

It said the lower-price environment, combined with the higher cost of consuming third-party lithium carbonate versus Livent-produced carbonate from Argentina, would weigh on the 2020 adjusted EBITDA outlook.

"Current market conditions remain challenging, with lower prices seen across all regions and most end markets," said CEO Paul Graves.

He said despite the company's commitment to its long-term strategy, it was reviewing current expansion plans.

Livent will provide further details on its outlook for 2020 and an update on capital spending plans when it releases its full-year 2019 results in late February.

The company, spun out of parent FMC Corp, completed an IPO at $17 in October, 2018. Shares are down 47% since then and the company has a current market capitalisation of $1.3 billion.